Renting out commercial property is a good source of income for someone who has a suitable property. One of the most important things to do is to ensure that you properly vet the company that wants to move in.
There are several things you should consider if you’re going to rent out a commercial property. These points apply to most commercial properties, but you may have to finetune them a bit to fit your needs.
Review the application
Have the prospective tenant complete a detailed rental application. This should include their business information, including the company’s name, contact information, tax identification number, business structure and trade references. Obtain a copy of the business plan to look over.
Request financial statements for the business, such as profit and loss statements, balance sheets and cash flow statements for at least the past two years, if the company has been in business that long. If it’s a new company, you may consider asking for financials from the financially responsible party so you can determine if they can pay you even if the business isn’t as profitable as they expect.
Contact the trade references provided in the rental application to verify the prospective tenant’s payment history and business relationships. You should also contact their previous landlords to inquire about their rental history, including their timeliness in paying rent, their compliance with lease terms, and the overall condition of the property upon vacating.
Ensure that the prospective tenant’s business complies with all applicable local, state, and federal laws and regulations, such as obtaining necessary licenses and permits. All of these points can provide you with some information upon which to base your decision. Once you know you have the right tenant for your space, it’s wise to have legal guidance in drafting your lease agreement.